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EQUATORIAL GUINEA’s Energy Market
The Ministry of Mines and Hydrocarbons of Equatorial Guinea and the Joint Venture (JV) partners at Block G offshore Equatorial Guinea, which include Trident Energy, Kosmos Energy, Panoro Energy and GEPetrol have agreed to extend the Production Sharing Contract (PSC) until 31 December 2040, covering the producing Ceiba and Okume Complex Fields.
The extension will support the next phase of investment by the JV partners with further development drilling commencing in H2 2023, targeting material new production growth. Before the extension, the PSC expiry for the Ceiba Field was 2029, and 2034 for the Okume Complex. The extension of the PSC is expected to increase Panaro’s net 2P reserves by between two to three million barrels.
Panoro’s full-year 2021 working interest (14.25%) production at Block G averaged 4,261 barrels per day (bpd) on a proforma basis, accounting for approximately 56% of Panoro’s total production. Trident Energy is the operator of Block G with a 40.375% working interest, while Kosmos Energy holds a 40.375% and GEPetrol a 5.0%.
Group Managing Director (GMD) of the Nigerian National Petroleum Company (NNPC) Limited, Alhaji Mele Kyari, told the House of Representatives Adhoc Committee investigating the state of refineries in Nigeria that 25 years of bad management was responsible for the poor state of the country’s refineries. Kyari assured that total rehabilitation of the refineries was underway.
The NNPC followed due process and the Federal Executive Council (FEC) approved the overhaul of the Port Harcourt Refinery by approving a contract of $1.55 billion for the job. The GMD said work was presently ongoing at the Port Harcourt refinery and the Kaduna and Warri refineries would also commence soon.
The Minister of State for Petroleum Resources, Chief Timipre Sylva, at the 2022 Annual Public Lecture of the Nigerian Society of Engineers (NSE), shared his optimism that its plan for gas development would positively impact the country economically. The lecture was titled “Inclusive Energy Transition: Key Issues, Investment Opportunities and Barriers Towards Achieving the Decades of Gas Initiative in Nigeria.” Chief Sylva said he is optimistic that the European Union’s plan to designate natural gas as ‘green energy’ would guarantee access to more funding for gas development projects in the country to power its “Decade of Gas Initiative.”
The Minister stated that the chances of accessing the much-needed funding to boost gas production to meet domestic and export demands is getting brighter with the series of requests by European nations for more gas supplies from Nigeria. Chief Sylva explained that Nigeria was following a transition pathway that combines technology, investment, business strategies, and government policy to transition from its current energy system to a low-carbon system and natural gas playing a pivotal role over the next decade.
The Minister noted that Nigeria has huge natural gas reserves and a highly skilled workforce positioned to pioneer future natural gas technology and compete in global markets. He called on members of the NSE to leverage the existing and future technologies, including next-generation mobile broadband, the Internet of Things, artificial intelligence, 3D printing and others, to provide the tools for integrated solutions for the decade of gas.
GLOBAL Energy Market Trends
On Thursday 12th May, oil prices weakened on fears that recession, prolonged Covid-19 lockdowns in China and war in eastern Europe will severely hit global demand. The U.S. West Texas Intermediate (WTI) crude futures traded 0.6% higher at $105.11 a barrel at 9:10 AM ET (13:10 GMT), while the Brent contract fell 1% to $106.44 a barrel. The International Energy Agency cautioned that soaring pump prices and slowing economic growth are expected to significantly curb the demand recovery through the remainder of 2022 and into 2023. The U.S. commercial crude oil inventories increased by 8.5 million barrels from the previous week. At 424.2 million barrels, U.S. crude oil inventories are about 13% below the five-year average for this time of year.
Oil prices are under pressure amid worries that rising interest rates to combat inflation will severely curtail global economic growth, potentially plunging some regions into recession. The Organization of the Petroleum Exporting Countries cut its forecast for world oil demand for 2022 because of COVID-19 lockdowns in China and the war in eastern Europe. In its monthly report for May, OPEC said it now expects global demand to grow by an average of only 3.4 million bpd for 2022, down from a prior estimate of 3.7 million bpd. OPEC also revised down its estimate for Russian oil production this year by 360,000 bpd. The EU has yet to agree on details of the proposed embargo on Russian oil. Hungary is opposing the ban and preventing a unanimous agreement because of its dependence on supply from Moscow.